2025-05-27 13:01

ORLANDO, Florida, May 27 (Reuters) - If the United States is to significantly reduce or, whisper it, eliminate its trade deficit, the dollar will probably have to weaken a lot. How much is unclear, though, as history shows large dollar declines are rare and have unpredictable consequences for trade. Reducing the U.S. trade deficit is the key goal of President Donald Trump's economic agenda because he believes it reflects decades of other countries "ripping off" America to the tune of hundreds of billions of dollars annually. Sign up here. Stephen Miran, chair of the Council of Economic Advisers, published a paper in November titled "A User's Guide to Restructuring the Global Trading System" in which he argued that the dollar is "persistently over-valued" from a trade perspective. "Sweeping tariffs and a shift away from strong dollar policy" could fundamentally reshape the global trade and financial systems. If a weaker exchange rate is the Trump administration's goal, it is on the right track, with the greenback down nearly 10% this year on the back of growing concerns over Washington's fiscal trajectory and policy credibility as well as the end of "U.S. exceptionalism" and the "safe haven" status of Treasuries. But it is good to remember that a 15% fall in the dollar during Trump's first term had no impact on the trade deficit, which remained between 2.5% and 3.0% of GDP until the pandemic. Making a dent in the U.S. deficit will therefore require a much bigger move. THE WEIGHT OF HISTORY Reducing the trade deficit will be a challenge, eliminating it without a recession, a historic feat. The United States has run a persistent deficit for the past half-century, as insatiable consumer demand has sucked in goods from around the world and voracious appetite for U.S. assets from overseas has kept capital flowing stateside. The only exception was in the third quarter of 1980, when the U.S. posted a slender trade surplus of 0.2% of GDP, and trade with the rest of the world almost briefly balanced in 1982 and 1991-92. But these periods all coincided with - or were the result of - sharp slowdowns in U.S. economic activity that ultimately ended in recession. As growth shrank, import demand slumped and the trade gap narrowed. The dollar only played a significant role in one of them. In 1987, the trade gap was a then-record 3.1% of GDP. But it had almost disappeared by the early 1990s, largely because of the dollar's 50% devaluation from 1985-87, its biggest-ever depreciation. That three-year decline was accelerated by the Plaza Accord in September 1985, a coordinated response between the world's economic powers to weaken the dollar following its parabolic rise in the first half of the 1980s. But that does not mean large depreciations always coincide with reductions in the trade deficit. The dollar's second-largest decline was a 40% fall between 2002 and mid-2008, just before Lehman Brothers collapsed. But the U.S. trade deficit actually widened throughout most of that period, peaking at a record 6% of GDP in 2005. While it had shrunk by more than three percentage points by 2009, that was due more to plunging imports during the Great Recession than the exchange rate. These two episodes of deep, protracted dollar depreciation stand out because over the past 50 years, the dollar index has only had two other declines exceeding 20%, in 1977-78 and the early 1990s, and a few other slides of 15-20%. None of these had any discernible impact on the U.S. trade balance. DEFICIT TO 'VANISH'? The U.S. administration is correct that the dollar is historically strong today by several broad measures. Given that President Trump and Treasury Secretary Scott Bessent seem intent on rebalancing global trade, pressure on the greenback looks unlikely to lift any time soon. But how much would the dollar have to fall to whittle away the yawning trade deficit, which last year totaled $918 billion, or 3.1% of GDP? Hedge fund manager Andreas Steno Larsen reckons a 20-25% depreciation over the next two years would see the deficit "vanish", while Deutsche Bank's Peter Hooper thinks a 20-30% depreciation could be enough to "eventually" narrow the deficit by about 3% of GDP. "This means that a significant reversal of the roughly 40% appreciation of the dollar in real (price-adjusted) terms against a broad set of currencies since 2010 could be sufficient to get the current deficit back to a zero balance," Hooper wrote last week. History suggests this may be challenging without a severe economic slowdown. But that's a risk the administration seems prepared to accept. (The opinions expressed here are those of the author, a columnist for Reuters) https://www.reuters.com/markets/currencies/historic-dollar-fall-needed-eliminate-us-trade-deficit-mcgeever-2025-05-27/

2025-05-27 12:53

Circle, shareholders seek as much as $624 million Cathie Wood's ARK set to buy up to $150 million of shares in IPO Stablecoin giant had tried going public through SPAC deal previously May 27 (Reuters) - Circle Internet said on Tuesday it was targeting a valuation of up to $6.71 billion on a fully diluted basis in its U.S. initial public offering, as the stablecoin giant looks to tap into growing optimism around cryptocurrency. New York-based Circle and some existing investors are looking to raise up to $624 million by offering 24 million shares priced between $24 and $26 apiece. Sign up here. U.S. President Donald Trump's administration has embraced cryptocurrencies and pledged a more "rational" approach to digital asset regulations, encouraging companies from the industry to go public. "The outlook for crypto IPOs is better than at any point in the past 3 years or so," said Matt Kennedy, senior strategist at Renaissance Capital, a provider of IPO-focused research and ETFs. Progress in trade talks between the U.S. and its top trading partners has also injected life into the IPO market, prompting companies to go ahead with their stock market launches as tariff-driven turbulence has eased. Circle is offering 9.6 million shares in the offering, while selling shareholders, including venture capital firms Accel and General Catalyst, are parting ways with 14.4 million shares. Cathie Wood's ARK Investment Management has indicated its intention to buy up to $150 million shares of Circle in the IPO. The company's flotation would be one of the biggest crypto listings since Coinbase Global's (COIN.O) , opens new tab, stock market debut in 2021. Mike Novogratz's crypto firm Galaxy Digital (GLXY.O) , opens new tab also debuted on the Nasdaq earlier this month. Circle had attempted to go public through a $9 billion blank-check deal with Bob Diamond-backed SPAC, but the deal fell apart in late 2022. "Circle now returning to the public markets indicates regained confidence — but at a 25% lower valuation, which reflects more realistic market conditions and less frothy expectations," said US Tiger Securities analyst Bo Pei. STABLECOIN FOCUS Founded in 2013, Circle is the issuer of USDC, which has a market capitalization of over $60 billion and is the second-biggest stablecoin after Tether, according to crypto market tracker CoinGecko. Stablecoins are cryptocurrencies that are usually pegged to a fiat currency such as the U.S. dollar. Besides USDC, Circle also issues the euro-denominated stablecoin EURC. Circle's IPO comes as the stablecoin bill advances through the U.S. Senate, which could further accelerate the adoption of the digital tokens. J.P. Morgan estimates the market size for stablecoins could grow to $500 billion to $750 billion over the coming years. Circle will list on the New York Stock Exchange under the symbol "CRCL". J.P. Morgan, Citigroup and Goldman Sachs are the lead underwriters. https://www.reuters.com/technology/crypto-firm-circle-internet-some-shareholders-aim-raise-624-million-us-ipo-2025-05-27/

2025-05-27 12:47

MILAN, May 27 (Reuters) - Eni (ENI.MI) , opens new tab has entered exclusive talks to sell a 49.99% stake in its carbon capture, utilisation and storage (CCUS) business to BlackRock's (BLK.N) , opens new tab infrastructure fund GIP, the Italian energy group said on Tuesday. The move is part of Eni's broader strategy to develop dedicated units - or satellites - and sell minority stakes in them to fund their growth. Sign up here. That allows Eni to expand its low-carbon businesses while preserving its capacity to invest in oil and gas activities, Chief Transition and Financial Officer Francesco Gattei recently said. Eni CCUS Holding includes the Hynet and Bacton projects in Britain and L10 in the Netherlands, and has future rights to acquire Italy's carbon capture project in Ravenna. According to the agreement under negotiation, GIP will not only acquire a stake but also support investments to develop the CCUS projects, Eni said in a statement. The Italian group said the agreement came after a selection process among several suitors. Sources told Reuters in March that GIP, HitecVision, Macquarie, Italy's Snam (SRG.MI) , opens new tab and Thailand's PTT Exploration and Production Public Company had presented non-binding bids for the business. CCUS technology removes CO2 produced by industrial processes from the atmosphere or captures it at the point of emission and stores it underground. The International Energy Agency says the technology can play a vital role in achieving global climate goals. But critics say it risks prolonging the use of fossil fuels and question its commercial viability. https://www.reuters.com/sustainability/climate-energy/eni-exclusive-talks-with-gip-sale-4999-carbon-capture-unit-2025-05-27/

2025-05-27 12:41

LONDON, May 27 (Reuters) - Gold imports to Switzerland from the United States jumped to the highest monthly level since at least 2012 in April after the exclusion of precious metals from U.S. import tariffs, Swiss customs data showed on Tuesday. Switzerland, the world's biggest bullion refining and transit hub, and Britain, home to the world's largest over-the-counter gold trading hub, registered massive outflows to the U.S. over December-March as traders sought to hedge against the possibility of broad U.S. tariffs hitting bullion imports. Sign up here. The Swiss data showed that gold imports from the U.S. rose to 63.0 metric tons in April from 25.5 tons in March. It was the highest in monthly data going back to early 2012. Switzerland's total gold exports fell by 31% month on month in April with gold deliveries to the U.S. dropping to 12.7 tons from 103.3 tons in March. Exports to the UK rose, indicating that gold was also coming from the U.S. back to London vaults via Swiss refineries. Deliveries to traditional gold-consuming markets - India and China - rose month on month in April but remained below the level for April last year. Swiss total gold exports and supplies to key markets* (in kgs): * Source: Swiss customs. Data subject to revision. https://www.reuters.com/world/china/swiss-monthly-gold-imports-us-hit-highest-since-least-2012-2025-05-27/

2025-05-27 12:40

MOSCOW, May 27 (Reuters) - Russian energy giant Gazprom (GAZP.MM) , opens new tab said on Tuesday it had put a business centre near Moscow that housed its offices up for sale for a starting price of 10.34 billion roubles ($129 million). Gazprom embarked on the sale of a number of real estate assets last year after posting a 2023 loss of almost $7 billion as gas exports to Europe collapsed, and after having completed the move of its headquarters to St. Petersburg in 2021. Sign up here. The company said it is aiming to sell the Business centre, which includes 31 real estate assets and hosted Gazprom's gas retail business, which sells gas to Moscow city, the Moscow region and other domestic markets. ($1 = 80.1000 roubles) https://www.reuters.com/business/energy/russias-gazprom-puts-offices-near-moscow-up-sale-129-million-2025-05-27/

2025-05-27 12:20

Confindustria requests billions in state aid PM Meloni looks at ways to tackle high energy costs Italy aims to spend EU funds to boost productivity ROME, May 27 (Reuters) - Italy's main business lobby Confindustria called on Tuesday for billions of euros of state aid to help firms cope with high energy costs and the prospect of U.S. trade tariffs. Speaking at Confindustria's annual assembly in the northern city of Bologna, chairman Emanuele Orsini said the European Union should also allow member states to raise spending to boost investments without breaching the bloc's fiscal rules. Sign up here. "We need to act urgently" to lower energy costs, Orsini said, adding that businesses were facing "an unsustainable situation." The funding for the aid package could come from an overhaul of Italy's EU-backed post-COVID recovery plan, alongside EU regional development funds, he said. Last year, Italy's average electricity price reached 109 euros ($123.68) per megawatt hour, nearly double that in France. With the possibility of a trade war between Europe and the United States adding to uncertainty, Orsini said the government should set aside 8 billion euros over three to five years in tax breaks to allow businesses to boost investment. Speaking at the same event, Meloni said surging energy costs were the most pressing economic issue facing her government, but added that "spending public money cannot be the solution." Confindustria is known for its calls for corporate tax cuts and state subsidies, while its member firms show little willingness to grant pay hikes to workers. Italian salaries are below the level of 1990 in inflation-adjusted terms. Meloni said her government was conducting an assessment of the national energy market to determine whether high prices were partly the result of speculation. She added that Italy was discussing with EU authorities alternative ways to spend up to 15 billion euros of already allocated EU funds, in order to boost the country's chronically weak productivity. Rome has committed to bring its budget deficit below the European Union's 3% of gross domestic product (GDP) ceiling in 2026, from a 3.8% ratio posted in 2024. ($1 = 0.8813 euros) https://www.reuters.com/markets/rates-bonds/italys-business-lobby-calls-8-bln-euros-state-aid-investments-2025-05-27/